Legislature(2003 - 2004)
03/26/2004 03:26 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
March 26, 2004
3:26 p.m.
MEMBERS PRESENT
Representative Nancy Dahlstrom
Representative Bob Lynn
Representative Norman Rokeberg
Representative David Guttenberg
Representative Tom Anderson, Chair
MEMBERS ABSENT
Representative Carl Gatto, Vice Chair
Representative Harry Crawford
COMMITTEE CALENDAR
HOUSE BILL NO. 148
"An Act instructing the State Board of Registration for
Architects, Engineers, and Land Surveyors to adopt minimum
technical standards relating to the practice of surveying."
- HEARD AND HELD
HOUSE BILL NO. 330
"An Act shortening the time periods after which certain
unclaimed property is presumed to be abandoned; and providing
for an effective date."
- MOVED CSHB 330(L&C) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 148
SHORT TITLE: LAND SURVEY STANDARDS
SPONSOR(S): REPRESENTATIVE(S) HARRIS
03/04/03 (H) READ THE FIRST TIME - REFERRALS
03/04/03 (H) L&C
03/31/03 (H) L&C AT 3:15 PM CAPITOL 17
03/31/03 (H) Heard & Held
03/31/03 (H) MINUTE(L&C)
04/07/03 (H) L&C AT 3:15 PM CAPITOL 17
04/07/03 (H) Scheduled But Not Heard
03/26/04 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 330
SHORT TITLE: DECREASE TIME TO CLAIM UNCLAIMED PROPERTY
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
05/21/03 (H) READ THE FIRST TIME - REFERRALS
05/21/03 (H) L&C, STA
03/24/04 (H) L&C AT 3:15 PM CAPITOL 17
03/24/04 (H) Scheduled But Not Heard
03/26/04 (H) L&C AT 3:15 PM CAPITOL 17
WITNESS REGISTER
PETER FELLMAN, Staff
to Representative John Harris
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the CS for HB 148 on behalf of
Representative John Harris, sponsor.
PATRICK KALEN, Chair
Legislative Committee
Alaska Society of Professional Land Surveyors (ASPLS)
Fairbanks, Alaska
POSITION STATEMENT: Testified during the discussion of HB 148.
LILLIAN B. WOOD, Broker
Valdez Realty
Valdez, Alaska
POSITION STATEMENT: Testified on behalf of herself and her
husband in support of HB 148.
PATRICK CHURCH, Surveyor
Homer, Alaska
POSITION STATEMENT: Testified against HB 148, saying the bill
works against the professional land surveyor's ability to
exercise field judgment.
MICHAEL SCHODER, Land Surveyor;
President
Alaska Society of Professional Land Surveyors
Anchorage, Alaska
POSITION STATEMENT: Testified on behalf of ASPLS in support of
HB 148.
PAUL WHIPPLE, Land Surveyor
Alaska Society of Professional Land Surveyors;
Past President
Alaska Professional Design Council
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 148 and answered
questions.
RACHEL LEWIS
Unclaimed Property Section
Treasury Division
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Presented amendments to HB 330 on behalf of
the Department of Revenue.
ACTION NARRATIVE
TAPE 04-34, SIDE A
Number 0001
CHAIR TOM ANDERSON called the House Labor and Commerce Standing
Committee meeting to order at 3:26 p.m. Representatives
Anderson, Dahlstrom, Lynn, Rokeberg, and Guttenberg were present
at the call to order.
HB 148-LAND SURVEY STANDARDS
REPRESENTATIVE ROKEBERG announced that the first order of
business would be HOUSE BILL NO. 148, "An Act instructing the
State Board of Registration for Architects, Engineers, and Land
Surveyors to adopt minimum technical standards relating to the
practice of surveying."
Number 0074
PETER FELLMAN, Staff to Representative John Harris, Alaska State
Legislature, sponsor of HB 148, testified that this bill had
been before the House Labor and Commerce Standing Committee last
session where several issues were pointed out. He stated that
Representative Harris took the recommendations seriously and has
worked with the State Board of Registration for Architects,
Engineers and Land Surveyors, and the Alaska Society of
Professional Land Surveyors, and individual land surveyors and
real estate people.
MR. FELLMAN stated that this legislation directs the
commissioner to adopt regulations for mortgage surveys by
working with the Alaska Society of Professional Land Surveyors;
it also defines what a mortgage survey is.
REPRESENTATIVE LYNN asked if a mortgage survey is commonly known
as an "as built" survey.
MR. FELLMAN responded that he thinks that is a fair
characterization.
Number 0229
REPRESENTATIVE ROKEBERG moved to adopt the proposed committee
substitute (CS) to HB 148, Version 23-LS0417\W, Kurtz, 2/23/04
as a work draft. There being no objection, Version W was before
the committee.
REPRESENTATIVE ROKEBERG asked for clarification on the bill's
intent.
MR. FELLMAN stated that the bill directs the commissioner to
adopt regulations by working with the Alaska Society of
Professional Land Surveyors (ASPLS). He pointed out that the
Board of Registration for Architects, Engineers, and Land
Surveyors enforce regulations rather than adopt regulations and
they recommended that the commissioner work with ASPLS.
Number 0372
REPRESENTATIVE LYNN asked if Representative Harris' office had
checked with mortgage lenders and various title companies in
Alaska to see if they concur with the proposed CS.
MR. FELLMAN replied that they had. He stated that title
companies can determine what type of survey they want. A
mortgage survey defines where the buildings are on a piece of
real estate. He said they support this bill.
REPRESENTATIVE LYNN probed as to whether or not mortgage
companies had been contacted.
MR. FELLMAN stated that he has not contacted anyone from the
lending industry.
REPRESENTATIVE ROKEBERG noted there is no correspondence from
the title companies supporting this bill in the packet.
MR. FELLMAN replied that there was no correspondence. He noted
that he had made phone calls to determine if this bill would
cause a problem. He said, "They request whatever varying degree
of survey they want. And, so this is ... sets a standard for a
mortgage survey, so if they say give me a mortgage survey, we
know what it is without having a mortgage survey done in the
Kenai which would be different than a mortgage survey done in
Fairbanks, ... this puts everybody on the same page ...."
REPRESENTATIVE LYNN asked if this bill sets a minimum standard
for as built surveys.
MR. FELLMAN replied that it does.
Number 0520
REPRESENTATIVE ROKEBERG read a portion of Section 2:
In developing regulations establishing minimum
standards for the performance of mortgage surveys, the
commissioner shall consult with and consider adopting
standards recommended by the Alaska Society of
Professional Land Surveyors.
REPRESENTATIVE ROKEBERG then asked if the commissioner should
also consult with the lending institutions, title companies, and
real estate practitioners of the state, to make sure they are
all in agreement. He said he is concerned that the standards
being developed should be consistent with practices "out in the
real world."
MR. FELLMAN replied that this is a good point.
Number 0598
PATRICK KALEN, Chair, Legislative Committee, Alaska Society of
Professional Land Surveyors (ASPLS), testified that a couple of
the surveyors put together a set of standards that originated
with Ohio, and passed them for review to members of the ASPLS.
He described the standards as a simple, two and a half page list
of what should go into a mortgage survey.
REPRESENTATIVE ROKEBERG asked Mr. Kalen if he had consulted with
the mortgage underwriters and the Land Title Association and so
forth when he was discussing this proposed set of standards.
MR. KALEN replied that he had not.
REPRESENTATIVE ROKEBERG noted that according to the ASPLS letter
[01/26/04] in the packet, if Alaska were to adopt standards used
in Florida the costs to perform surveys would increase and this
cost would be passed to the consumer. He asked if the ASPLS had
consequently chosen a different approach.
MR. KALEN replied that the Florida standards were attractive
since they solved problems, however, the increased cost "made it
kind of sensitive." He noted that in Alaska there is a wide
variation of lot sizes and some very rural land. He said he
feels that these issues are addressed by the standards they
propose. He went on to explain that Florida requires that the
monumentation for a parcel always exist and, if a mortgage
survey is done and the monumentation does not exist, the
surveyor must reestablish the boundary. This procedure makes
for a higher first-time expense but keeps titles very clear.
Mr. Kalen commented, "The initial costs are definitely there,
and ... we dodged them. We're taking the low-budget route."
Number 0765
REPRESENTATIVE ROKEBERG asked Mr. Kalen if he would object to
the committee modifying the bill and requesting that ASPLS
consult with other affected parties in the state in developing
the standards.
MR. KALEN replied that he does not think there would be an
objection and commented that his association is not the driving
force behind this bill.
REPRESENTATIVE ROKEBERG asked who is the driving force.
MR. KALEN replied that he heard the ideas behind the bill from
the sponsor, Representative Harris. He noted that there are not
any standard surveying rules for plot plans, also called as-
built surveys or mortgage surveys, with the consequence of
uneven quality. He stated:
Speaking from the point of view of the board of
registration, when we have poor surveys being done,
and cases being brought against surveyors who are
doing less than minimum standard work, we quite often
find that mortgage surveys is a significant part of
the bad work. But the investigators can't - have a
real hard time getting a handle on it because of a
lack of standards.
Number 0893
REPRESENTATIVE ROKEBERG asked if it is Mr. Kalen's testimony
that there is no standardization in the nomenclature for these
surveys since they are called by various names.
MR. KALEN replied that the term "as-built survey" is very
inclusive and refers to any type of survey where the surveyor is
locating physical features. As-built surveys include all of the
engineering surveys for route surveys, the higher-grade American
Land Title Association [ALTA] surveys. He referred to these
surveys as the "non-problem" surveys, for example, mortgage
surveys when Fred Meyer or Wal-Mart intend to build. These
surveys invoke national standards and are very thorough and
expensive. He compared a survey for property involving a
$100,000 loan with a survey involving $1,000,000 loan. The more
expensive loan will call for an ALTA survey using national
standards and cost $8,000 to $15,000. In a plain mortgage
survey, where the loan is $100,000 or less, he said, "There
aren't any rules at all. You just may show a cabin on a five
acre lot and you may or may not show how far it is from the
boundary, depending on who did the survey."
Number 1045
LILLIAN B. WOOD, Broker, Valdez Realty, testified for herself
and her husband, Walter M. Wood, (indisc. - due to poor
transmission).
CHAIR ANDERSON asked Ms. Wood to restate her position on HB 148.
MS. WOOD replied, "We're very much in support of the bill."
Number 1122
PATRICK CHURCH, Surveyor, testified that he had a discussion
with the land surveyor on the board, about the "push" behind
this legislation at the last ASPLS meeting. He felt that it was
involved with active enforcement. [Some testimony indisc. - due
to poor transmission.]
He referred to the certificate of registration for a land
surveyor and said that without enforcement, additional
personnel, and funding, he didn't think the problem would be
fully addressed. He stated that surveyors have to use judgment
in the field and said, "I don't know what this cookie cutter
attempt is going to ... it works against the land surveyors
ability to exercise field judgment." He felt it should be up to
the client to determine what is necessary.
REPRESENTATIVE ROKEBERG asked Mr. Church if he thinks it would
be better because of common usage to use the term "as-built
survey" or "as-built mortgage survey", rather than mortgage
survey.
MR. CHURCH replied that he does not think there should be a
statewide standard.
REPRESENTATIVE GUTTENBERG asked for clarification.
MR. CHURCH responded that he thinks that the title company or
the client should determine what they require and think is
necessary and the surveyor should exercise his professional
judgment.
REPRESENTATIVE GUTTENBERG pointed out that if a property owner
in Kodiak sold to someone getting a deed from a Fairbanks bank,
a case of conflicting interests and concerns could result if
there were different standards for the survey.
MR. CHURCH replied that he has many books he would refer to,
including the standards of practice manual, to solve this
problem. He also noted that techniques are changing and he does
not believe this bill would solve the problem. He said he
thinks the problem has to do with enforcement.
Number 1477
MR. FELLMAN stated that if there was no standard there would be
nothing to enforce. He asked how could the Board of Registered
Architects, Engineers, and Land Surveyors take action against a
surveyor who didn't perform an acceptable survey if they did not
know what the standard for a mortgage survey was.
REPRESENTATIVE GUTTENBERG asked Mr. Kalen if a minimum standard
is established would that preclude a lending agency or realtor
from asking for additional information.
MR. KALEN replied that is correct and likely since the minimum
standards were not "very great." He opined that Mr. Church
might not have actually seen the proposed minimum standards.
The proposed standards would not have any effect on any mortgage
survey that they produce, he added. However, he said he feels
absolutely certain that the new standards would have an effect
on some poorly done surveys. He testified that the enforcement
aspect is a problem because of the present lack of standards.
Number 1603
REPRESENTATIVE LYNN disclosed that he is a licensed, associate
real estate broker with an office in Anchorage. He said that in
his experience surveys come as part of a package where the
lender requires an as-built survey that is basically a map
showing the improvements on the property. It is difficult to do
these surveys without monuments since there is no established
point of reference without them. He stated there needs to be
some minimum standards that include using monuments. He said he
would like to see an economical, portable survey that could be
taken from one title company, lender, or realtor to another.
Number 1698
MICHAEL SCHODER, Land Surveyor; President, Alaska Society of
Professional Land Surveyors, responded to previous testimony:
ASPLS does support this bill. We are a key part in
the committee substitute that you are considering here
today ... our active standards of practice
subcommittee will work diligently to develop mortgage
survey standards. ... Mr. Church had referred to our
standards of practice manual as being six inches
thick. It is. Most of that manual, though, is a
compilation of Alaska statutes and administrative
code. Our standards section has been in place for
over 20 years but it is limited to a variety of other
types of surveys. And we never got a chance to
actually address the mortgage survey. This really is
the low-end survey of many of the things that we do as
a profession. Although it does create some problems,
I think that Mr. Kalen has accurately reflected a
reference to the America Land Title Association, ACSM
[American Congress on Surveying and Mapping], ALTA
standard survey that is a very thorough survey. [It]
is always an option to a lender for those properties,
even residential properties, that may have boundary
problems, that they want a very consistent survey, as
Representative Lynn said, even to go across the
country so it would look the same to any mortgage.
So, that's always an option. ... I think the rub is
that for most lower-priced properties, as Mr. Kalen
has mentioned earlier, they're not willing to invest
that type of money in a real estate closure process.
We have had quite a bit of discussion about the title
of what we call these things. ... Typically in
Anchorage, we call them "as-builts" and in Fairbanks
they're called "claw plans" (ph) and in Anchorage, our
municipal public works has a whole different -- that's
a pre-building permit survey. It's called a "plot
plan" so there may be needs [to] have some work with a
title of mortgage survey, or as was suggested earlier,
maybe "as-built mortgage survey". We're willing to
work with that and we are also willing to work with
those lenders, title companies, and others, as the
ASPLS helps develop the mortgage survey standards.
Number 1825
PAUL WHIPPLE, Land Surveyor, Alaska Society of Professional Land
Surveyors; Past President, Alaska Professional Design Council,
testified in support of HB 148. He stated he personally does
not do mortgage surveys or residential lot surveys but
intercepts many phone calls from the public regarding the
confusion that is generated by not having any standards. He
opined that by establishing standards much of this confusion
would be cleared up.
CHAIR ANDERSON, upon determining no one else wished to testify,
closed public testimony.
REPRESENTATIVE ROKEBERG asked if as-built surveys are currently
not defined in statute or regulation.
MR. SCHODER replied that to his knowledge that is correct.
REPRESENTATIVE ROKEBERG asked if the standards of practice
manual is compiled by his association. He also expressed
confusion as to the several terms for mortgage surveys used in
information from the ASPLS and in HB 148, and he asked if Mr.
Schoder could help the committee clarify this issue.
Number 1980
MR. SCHODER replied that this was so and he described the
manual. He said there is no specific section that spoke to as-
built mortgage surveys. He said he feels that the best-defined
term is the ALTA ACSM survey because it has specific, well-
defined, standards. He related that the terms in common usage
around the country - of mortgage surveys, mortgage inspections,
as-built surveys - all refer to the same instrument: it is a
location survey done to prove to the lenders that the
improvements on the property do not encroach on others and that
the improvements exist as reported in their real estate
transaction. It exists specifically for the lender's use and is
consequently very inexpensive. He noted that many surveyors do
not perform these surveys because of the low return and the
liability. This type of survey is not designed to be an
accurate boundary survey. He suggested working together with
the House Labor and Commerce Standing Committee to arrive at a
clear definition and term.
REPRESENTATIVE ROKEBERG replied that the bill empowers the ASPLS
to do this work and he is troubled by this testimony. He
clarified that the House Labor and Commerce Standing Committee,
as it represents the public, through this bill would grant some
authority to the ASPLS. He further stated the committee wants
to make sure that [ASPLS] performed in the most cost effective
and best way to satisfy consumers and members of the industry.
He noted that in his experience these surveys were called as-
built surveys and asked what term would be preferred.
MR. WHIPPLE offered that a mortgage survey is a subset of an as-
built survey. He said the title of HB 148 is testimony to a
nationwide discussion as to what to call this kind of survey.
He said in Montana it is called a "mortgage inspection survey,"
in Ohio it is call a "mortgage survey," and it's also known as a
"mortgage as-built location survey". He opined that the term
used in the bill is the most convenient and simple and hoped
that the public would use and understand it.
Number 2149
MR. KALEN commented that the ASPLS believes that both the
proposed standards and the proposed legislation do an excellent
job of grasping what word to use and how to define it. He
continued, "For the purposes of this section, mortgage survey
means a drawing that is made and sealed by a land surveyor,
showing the location of improvements on a parcel of real
property ...."
REPRESENTATIVE ROKEBERG noted that there is usage in the bill
packet of the terms "mortgage location survey" and "As-Built
Survey" [preamble to proposed mortgage survey standards]. He
also noted that he just realized that there is more than one
type of a mortgage survey and asked Mr. Kalen if this is
correct.
MR. KALEN said the only way he would consider more than one type
of a mortgage survey would be if the lender invoked the ALTA
survey standards. This would still be a mortgage survey but
with a higher level of standards.
REPRESENTATIVE ROKEBERG argued for a clear distinction to be
made since this would accord with drafting laws. He asked if
they could use the ALTA and the American Congress of Surveying
and Mapping standards to define the term.
MR. KALEN replied that the ALTA standards are a part of the
Alaska Society of Professional Land Surveyors Standards of
Practice Manual.
Number 2270
REPRESENTATIVE GUTTENBERG said if the committee is going to set
a minimum standard then it should be a minimum standard, not
minimum standards for different kinds of surveys. If the
industry and lending agencies and realtors want additional
standards they can request them at another level.
MR. KALEN agreed.
CHAIR ANDERSON proposed that Representative Rokeberg craft an
amendment.
MR. FELLMAN said that the intent of HB 148 is to establish
standards for a mortgage survey. He said, "This is really a
bottom end. So that if somebody says they want a mortgage
survey to determine where the buildings are, how far they are
from a property line - that's what this would do."
REPRESENTATIVE ROKEBERG stated that this bill establishes a
single minimum standard. He expressed concern that the
mortgagers needed to take part in this process so that the bill
would reflect their concerns.
MR. FELLMAN agreed.
Number 2378
REPRESENTATIVE ROKEBERG stated he would like to make some
conceptual amendments and get a CS drafted since there is no
other committee referral. HB 148 could be circulated among the
interested parties and then brought back to the committee, he
suggested.
TAPE 04-34, SIDE B
Number 2375
REPRESENTATIVE GUTTENBERG agreed and expressed a concern about
asking the commissioner to adopt regulations without anyone from
their office being present.
MR. FELLMAN said he has ascertained that Gerald Jennings [Land
Surveyor, Realty Services (Anchorage), Division of Mining, Land
and Water, Department of Natural Resources] is the individual
who would work with the surveyors.
Number 2355
REPRESENTATIVE ROKEBERG moved to adopt Conceptual Amendment 1,
stating, "The committee's intent is to establish a minimum
standard for ... a mortgage survey, singular. That the title
should have 'mortgage surveys' is OK."
Number 2308
CHAIR ANDERSON objected and immediately removed his objection.
Hearing no further objections, Chair Anderson announced that
Conceptual Amendment 1 was adopted.
Number 2295
REPRESENTATIVE ROKEBERG moved to adopt Conceptual Amendment 2 to
HB 148.
CHAIR ANDERSON objected.
REPRESENTATIVE ROKEBERG explained that Conceptual Amendment 2
would state that "the Alaska Society for Professional Land
Surveyors adopt standards ... not inconsistent with the American
Land Title Association (ALTA), the American Congress of Survey
and Mapping (ACSM), and, I believe, the National Society of
Professional Surveyors (NSPS), as closely as possible."
REPRESENTATIVE ROKEBERG requested feedback from Mr. Schoder, Mr.
Kalen, and Mr. Whipple on Conceptual Amendment 2.
Number 2259
MR. SCHODER said it might be workable. He said he understands
the intent of [Conceptual Amendment 2] is to be as consistent as
possible with the ACSM and NSPS standards.
REPRESENTATIVE ROKEBERG explained that the intent is for Alaska
to conform to national standards as much as possible.
MR. SCHODER said that is reasonable.
MR. KALEN relayed concerns because "the ALTA surveys are big
guys with a lot more detail in them."
REPRESENTATIVE ROKEBERG responded, "We want you to do that - we
want you to say that."
MR. KALEN replied, "You mean make some big surveys?"
REPRESENTATIVE ROKEBERG explained that Mr. Kalen should reflect
in the regulations that are drafted that they exist. He asked
if ALTA surveys are defined by ALTA.
MR. KALEN replied that they are defined by ALTA and ACSM. He
noted that ALTA was used in the drafting of the proposed
regulations. He said that much of what Representative Rokeberg
is aiming at may have already been accomplished.
Number 2200
REPRESENTATIVE ROKEBERG said that one of his concerns is that
there should be a minimum standard for a mortgage survey. He
suggested that Mr. Kalen's testimony indicates that there are
different types of surveys that could be commissioned by lenders
and property owners. He said he believes that the regulations
should be drafted to serve the purpose. He asked if he is
asking too much.
MR. KALEN opined that ALTA standards could be added as needed.
REPRESENTATIVE ROKEBERG explained that a committee substitute
would be drafted and sent to Mr. Kalen to see if it would work.
Number 2149
CHAIR ANDERSON removed his objection. There being no further
objection, Conceptual Amendment 2 was adopted.
Number 2139
REPRESENTATIVE ROKEBERG offered Conceptual Amendment 3 and
explained that it would best be placed on page 2, line 1, after
"the Alaska Society for Professional Land Surveyors." He said,
"It is conceptual because they will consult with mortgage
lenders, land title companies, and real estate companies when
considering and when drafting these regulations. The purpose of
which is to conform with the needs of the public and the
consumers to which they're serving."
CHAIR ANDERSON suggested using Representative Lynn's idea to use
"real estate and land title professionals when adopting
regulations".
REPRESENTATIVE ROKEBERG agreed to that friendly amendment. He
suggested that the cost to the consumer should be kept minimal.
CHAIR ANDERSON objected for discussion purposed.
Number 2093
REPRESENTATIVE GUTTENBERG reminded the committee that it is
looking for minimum standards. He opined that each of the
organizations would have a different interpretation of what the
minimum is for them. He said that the surveyors are being asked
to define what the minimum is.
REPRESENTATIVE ROKEBERG added that the mortgage companies are
the ones that need the surveys done.
REPRESENTATIVE GUTTENBERG said right, but that he has done
surveys for himself which did not require a mortgage company.
"If a mortgage company wants a survey that's enhanced over what
a minimum is, that's okay," he remarked. He suggested that
there should be a choice if a person wanted a survey on their
own property that was just minimum or less than minimum
standards.
CHAIR ANDERSON replied that he thought that was a good advisory
note to Conceptual Amendment 3.
Number 2036
CHAIR ANDERSON withdrew his objection. There being no further
objection, Conceptual Amendment 3 was adopted.
CHAIR ANDERSON stated that the three amendments would be
included in a new committee substitute and announced that HB 148
would be held over.
HB 330-DECREASE TIME TO CLAIM UNCLAIMED PROPERTY
CHAIR ANDERSON announced that the final order of business would
be HOUSE BILL NO. 330, "An Act shortening the time periods after
which certain unclaimed property is presumed to be abandoned;
and providing for an effective date."
Number 2003
RACHEL LEWIS, Unclaimed Property Section, Treasury Division,
Department of Revenue (DOR), reported that HB 330 was introduced
late into last year's legislative session, [sponsored by the
House Rules committee by request of the governor] and reworked
over the interim, and as a result, DOR and the Department of Law
arrived at suggested amendments.
Number 1980
REPRESENTATIVE LYNN moved to adopt the proposed committee
substitute (CS) for HB 330, Version 773-04-0035 Hbil.doc,
12/5/2003, as the working document. There being no objection,
Version 773-04-0035 was before the committee.
MS. LEWIS explained the differences between the previous and
current versions of the bill. She said that the first version
of the bill addressed specifically dormancy periods with
unclaimed property. It lowered dormancy or abandonment periods
when a check has gone uncashed for a period of time. "The
proposed CS addresses other parts of the Uniform Law
Commissioner's Model Punitive Damages Act of 1995, which also
had things to do with cleaning up some definitions and adding a
burden of proof section, which the State of Alaska statute did
not," she related. It also eliminates, in Section 6, the seven
distributions for stock before it becomes unclaimed property.
Number 1892
MS. LEWIS explained that in Section 10 the language is cleaned
up regarding unclaimed property below $100. Unclaimed property
need not be reported unless it totals $750, she added. Section
11 is an addition about uniform law commission and talks about
examining reports of people who have unclaimed property.
MS. LEWIS said that in the past DOR was required to publish in
the paper every year the new unclaimed property reported with
value over $100, which cost about $30,000. Last year there were
348 claims from the newspaper publication notice and 1,806
claims from the DOR web site, which bears no cost, and which
generated $390,000 being returned to unclaimed property owners,
she said. Section 13 leaves it up to DOR to determine how to
give notice of unclaimed property, she pointed out.
MS. LEWIS reported that all of the dormancy periods are directly
in line with the uniform law commission. She said that DOR is
trying to narrow it down for people who are reporting unclaimed
property to make it easier for them. There is a better chance
of finding the owner of unclaimed property when the dormancy
period is shorter, she said, and it is a benefit to the state
because the money is put in DOR's trust fund.
Number 1773
REPRESENTATIVE DAHLSTROM thanked Ms. Lewis for the great job in
testifying for the first time. She asked for the numbers
regarding publication costs to be repeated.
MS. LEWIS repeated the numbers.
REPRESENTATIVE DAHLSTROM asked if the reason so much more money
was generated from the web site is because it had a national
audience.
MS. LEWIS said yes.
Number 1730
REPRESENTATIVE ROKEBERG asked about the definition of gift
certificate as defined in Sections 16 and 14, whether it is the
gift certificate itself or the unused balance held by the
corporation.
MS. LEWIS said it is supposed to come to unclaimed property as
the gift certificate number and the person's name. The full
amount of the gift certificate is reimbursed, she said. If
there is a balance on the gift certificate, then it would only
be the remaining balance, she added. She said gift certificates
are already mentioned in the law, but what is not included are
electronically stored gift cards.
REPRESENTATIVE ROKEBERG asked if DOR is asking companies to
report their unclaimed balances.
MS. LEWIS said yes.
REPRESENTATIVE ROKEBERG asked if retailers typically report to
the state this unclaimed money.
MS. LEWIS replied that there is low compliance from gift
certificates.
REPRESENTATIVE ROKEBERG asked about the time period for
unclaimed stocks.
MS. LEWIS explained that any activity on a stock certificate
like a stock split, a dividend, a merger, or an acquisition will
take "seven of those pieces of activity that's generated by a
company before it's considered unclaimed." The Uniform Law
Commissioner's Model Punitive Damages Act eliminates that
completely. "After five years, when you send a dividend check
and it's not cashed, and you send a last-known letter to that
address, if they still haven't responded, it's unclaimed. Five
years is long enough. You don't have to wait for that other
activity," she said.
CHAIR ANDERSON asked if anyone has strong opposition to [the
proposed CS to HB 330].
Number 1530
MS. LEWIS explained the demutualization section of the bill was
not listed in the Uniform Law Commissioner's Model Punitive
Damages Act in 1995, which most states are using now. It is a
relatively new type of property that was generated because
mutual companies, in order to create revenue, decided to take
what were know as policyholders for life insurance and turn them
into stockholders so that they could generate revenue. Ms.
Lewis continued to explain:
Between the time when you are a policyholder with an
insurance company and when that policy pays out, there
is usually no activity. It's only upon the death of
someone that that would happen. You know your
premium's paid; 25 to 30 years later when you die,
your estate is going to get the life insurance money.
By making it a stock form of ownership, they have not
tried to contact any of these lost policyholders, so
now we have a lot, and it's estimated that between
$100 billion to $200 billion worth of stock and stock
proceeds generated from these demutualizations that
are being held by companies - as their lost
stockholders now, but they were originally
policyholders - they've been lost for years. So
demutualization is saying those companies have no way
of knowing if those policyholders are lost and not to
wait until the date of demutualization happened to
start the countdown for making it unclaimed property,
but to make the countdown start when they know that
the policyholder became abandoned from their property.
There are 13 states that have adopted this language.
It's just because we know right now that there are
people who are lost and their property is not getting
turned over because the companies are holding it as
active accounts because nothing has given them the
flag that it's inactive.
Number 1437
REPRESENTATIVE GUTTENBERG related a story about a person he
knows who had a stock investment for a long period of time. For
many years that person made contributions and then stopped.
They got a notice that their account had been lost and was found
by a third party who tried to claim a reward of 25 percent for
telling the person where their money was. He asked if this is
the kind of situation Ms. Lewis is referring to.
MS. LEWIS replied that there are two different issues in this
case. Fee finders have access to those records before the state
has an opportunity to try and locate the lost money, she
reported.
REPRESENTATIVE GUTTENBERG relayed that the person had been
receiving notices all along but didn't respond and so their
account was abandoned. In this case the person couldn't read,
he said.
CHAIR ANDERSON said it is a concern, but is probably best
discussed in regulations rather than statute.
Number 1334
REPRESENTATIVE LYNN said the proposed CS has been explained so
well that he has no questions.
REPRESENTATIVE DAHLSTROM moved to report CSHB 330, Version 773-
04-0035, Hbil.doc, 12/5/2003, out of committee with individual
recommendations and the accompanying fiscal notes. There being
no objection, CSHB 330(L&C) was reported from the House Labor
and Commerce Standing Committee.
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
4:37 p.m.
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